Panama Papers Leak: Panama Back In Tax Haven Blacklist

France Puts Panama Back On Blacklist Of Tax Havens Following “Panama Papers” Leak

Days after a leak of documents from a Panamanian law firm, also know as the “Panama Papers” leak, revealed a vast network of shell companies intended to help foreigners conceal money, France announced that it is placing the Central American country back on a blacklist of uncooperative tax jurisdictions.

“Panama is a country that wanted us to believe that it could respect the main international tax principles and thus it was taken off the tax haven blacklist,” French Finance Minister Michel Sapin told lawmakers during question time in parliament.

In light of the revelations, however, “France has decided to add Panama back on the list of uncooperative countries with all of the consequences that that will have for those who have dealings with Panama,” Sapin added.

The move lumps Panama in with the likes of Botswana, Brunei, Guatemala, Nauru, and the Marshall Islands and imposes severe restrictions on all financial transactions with the country. Dividends going from France to Panama will be taxed at 75%, and French authorities will scrutinize all such transfers. Also, it will no longer be possible to deduct taxes paid in Panama from a French tax bill.

Sapin urged the Organization for Economic Co-operation and Development, or OECD, to take similar measures.

Panamanian officials said they are currently in negotiations with the OECD to improve transparency rules and criticized the French move as premature. Álvaro Alemán, the minister of the Presidency, told a news conference in the capital that Panama would consider punitive measures against France that could include blocking foreign investment or withholding public tenders.

“The government is going to have to analyze the situation and is inclined to take a series of steps that naturally could go towards adopting means of retaliation,” Alemán said.

France removed Panama from the list of Uncooperative States and Territories (ETNC) in 2012 after the two countries reached a bilateral accord on fighting tax evasion.

But following the massive leak about clients of the Panama-based international law firm, Mossack Fonseca & Co., France said it is reversing the earlier agreement and has opened a preliminary investigation into aggravated tax fraud to establish whether French taxpayers are concerned. Of the 7,800 tax regularization cases French authorities dealt with last year, 515 involved a shell company registered in Panama, the Finance Ministry said.

The leak of some 11 million documents from Mossack Fonseca to a German newspaper and dozens of other media outlets around the world are said to detail how the firm and its clients conspired to launder money, dodge sanctions, and avoid taxes. The names of several heads of state and hundreds of wealthy individuals are said to be among those who availed themselves of the firm’s services.